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by Stephanie Neil, MA Editorial Staff Posted on Thursday, July 03, 2008 10:29:30 AM   | Abstract: | Total Value Assessment said to provide an alternative to traditional ROI metrics to measure long-term results and the broad impact of projects. |
Return on investment is the way most manufacturers measure the effectiveness of a technology deployment. But can a simple ROI model calculate long-term business value? Rockwell Automation doesn't think so. That's why the company recently introduced a new calculation model, called Total Value Assessment (TVA), that systematically measures the value-add earned throughout the life of an automation project.
The proprietary methodology is outlined in a new white paper, called "A Strategic Perspective on Value: Using a Total Value Assessment to More Accurately Quantify Long-Term Business Benefits." The paper defines what "value" is within manufacturing, providing examples of the tangible results achieved by manufacturers that have shifted from price-focused buying to value-focused decisions.
For example, manufacturers that apply the TVA method in their purchasing decisions reduce engineering turnaround time by 18% on average, according to Rockwell. In the case of one manufacturer, an 18% reduction meant an increase in value — or revenue earned — of $250,000.
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